Michael Joseph recounts his day at the giant telco. At the beginning of his work at Safaricom House, while it was expected that Kenya Posts and Telecommunications Corporation (KPTC) was to chip in. “All they did was to provide its rusty network and an angry subscriber base,” he says,
Also acting against Safaricom was its competitor KenCell, later known as Celtel (and now Airtel), which at the time of inception, had already been awarded the second mobile phone operator license, in February of 2000. It was already off the starting blocks and was rearing to launch its service in August of 2000.
Kencell had a brand new and bigger network, presenting great challenges for the technicians and Vodafone technocrats at Safaricom. “Safaricom had about 17,000 subscribers when I came on board. This is the number that I inherited. I never got to know what the company’s turnover was then, but it was very small. Given that each subscriber was spending about KSh 5000 per month, this gives an indication of what the revenues were back then,” said Michael Joseph.
Moving into the ground floor of Norfolk Towers, Michael and his team of 5 employees rolled up their sleeves and first begun by reconstructing the offices. The next business was to begin rebuilding the network by adding in new base stations and sprucing up the billing system, establishing a fully-fledged and 24/7 customer care facility that would handle the restless 17,000 dissatisfied subscribers and a sceptical public, with no mobile telephony culture.
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The team then moved to put together a customer friendly marketing team as well as drawing elaborate sales plans and design for the network. They had to work day and night for the rest of that year, their adrenaline pumping and with mission in mind. To relaunch the network, just in time, to pull the carpet off the feet of Kencell, which had over 85,000 subscribers and was already making inroads into the unexplored and virgin mobile telephony market in Kenya.
“On October 20th of 2000, we relaunched the network, which brought everybody over to the new system. We began to sell our new phones and pricing which was all pre-paid,” he says. Safaricom still had its 17,000 subscribers. “By the time I got here, the price of a handset was going for between KSh 100,000 and KSh 120,000. We sold the first handsets we brought in for KSh 8000,” he remembers.
At this moment, Safaricom was up against meeting the expectations of an already existing customer base, composed of individuals and corporates, who were expected to come onto the new network without the migration having any hitches. The company had to provide uninterrupted service, overcome all the quality problems and congestions that were rampant in the network prior to the entry of the Joseph team. Previously, there were instances when one could not make a call the whole day on the network.
Among the first critical departments that were set up was customer care, the human resource department, engineering technical and then sales and marketing. “These were the key departments we set up immediately at that time” said Michael.
His team had also to make key decisions on the direction the company was going to take, considering that it was beginning from a disadvantaged position in many respects. “The very first decisions included launching a pre-paid not a post-paid billing system. That means that we had to get a pre-paid billing system in place as well as scratch cards. I believed that our target market was going to be the ordinary man on the street and not the one with the credit card.
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“So we started with prepaid. We had then to decide how we were going to bill. We decided that we were going to bill per second which was an important decision, given that we were starting with no money. Billing per minute gives you 20-25 times more revenue than billing per second. In those days in Kenya, not many people understood this”, he explained.
The next decision was to build a strong customer service component, which would be free and available 24 hours a day. The they also made a decision to introduce low-cost handsets into the market.
These were the key decisions that formed the foundations of this company and the basis of our ultimate success. Although it took time for the market to understand that the per second billing was a much better proposition than per minute billing, it eventually turned out to be the right decision, said Michael. The relaunched network was to experience serious technical problems at the initial stages, forcing Safaricom to upgrade the equipment very quickly. There was also the ever presence of a respectable competitor, who equally had a good network and the cash flow to match.
The Hungary Connection
Safaricom had to deal with the teething problems posed by old equipment it had inherited. It had to build on what it had as opposed to the competitor who had the luxury of spending US$100 million on a brand new network. “All we had was US$20 million (KSh 2.6 billion) at current exchange rate, which had to pay for the new network, salaries and customer care shops. We had very little revenue then,” said Michael.
Compared to what he found in Kenya and at Safaricom, in Hungary which was his last posting before coming to Kenya, the start-up he built there was the third mobile phone operator. It started five years after the initial two operators had begun operations.
Further, Hungary had an existing culture of mobile phone telephony. It took this Hungarian company six month to build a new network, boosted by shareholders who had deep pockets. “In Kenya, we only had US$ 20 million, the market predominantly made of pre-paid customers. I learnt a lot of lessons in Hungary that I found applicable here” said Michael.
Contrary to what sceptics, cynics and those that were ready to cast stones say, it took Safaricom only six months to relaunch. By July 2001, it zoomed past its competitor, leaving a cloud of dust that has yet to settle down to date.
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